Real Estate Talk: The buyer’s contract - Westmount Magazine (2024)

There can be advantages for the buyer when one is used

By Joseph Marovitch

Previously published October 17, 2018

A buyer’s contract is a contract between a buyer and a broker, binding the buyer to purchase through the broker a property. In the buyer’s contract, the buyer and broker must put in writing precisely what type of property the broker is searching for the buyer to purchase. It must also be stated in the contract what the buyer is paying the broker for the brokers services, or if the buyer is paying the broker at all.

If the contract states that the broker will only search for properties that are represented by another broker, then the buyer may not have to pay the broker since the seller will provide the commission.

A buyer’s contract is a contract between a buyer and a broker, binding the buyer to purchase through the broker a property.

If the contract states that the broker can search for properties that are represented by an owner only, then the contract will state what the broker’s commission shall be from the buyer and not the seller.

In Quebec, a buyer’s contract between a buyer and a broker is rarely used, however, there can be advantages for the buyer when one is used. It is not a legal requirement to sign a buyer’s agreement. Brokers will always work with a qualified buyer however without a contract there are steps to take on both sides to insure time and money are not wasted.

Without a written agreement, and if the buyer is not someone the broker knows and trusts already, it is wise to have a face to face meeting to assess chemistry and trust. The broker wants to know that they will not spend time on research and visits only to find out that the buyer decided to go and buy a property without them. The buyer wants to know that the broker is representing their interest first and foremost. Trust is good, but a contract is legally binding.

‘Brokers will always work with a qualified buyer however without a contract there are steps to take on both sides to insure time and money are not wasted.’

The buyer’s contract does not require that the buyer must buy a property, but it does require that if the buyer does purchase a property as per the buyers stated criteria, the buyer will purchase through the broker.

As in a brokerage contract to sell, the buyers contract has clauses that protect the broker. If the buyer visits a property with the broker and does not purchase the property, and the contract expires, the broker may still collect commission should the buyer go back to the property and purchase it after the contract expires.

In Quebec it is not difficult to negate the buyers contract as well. If the contract states that the broker is to search for a two-bedroom condo in Ville Marie for $500,000 or less and the buyer decides to purchase a house with three bedrooms for $700,000, the buyer is within their legal right to not use the contracted broker to purchase the three-bedroom $700,000 house.

‘… the best situation is for the buyer and broker to decide to work together based on gut feeling, trust and integrity.’

As the buyer’s agreement is not a strong agreement, with several loopholes to circumvent its primary purpose, the best situation is for the buyer and broker to decide to work together based on gut feeling, trust and integrity. In the end, if you do not have trust and integrity, you have very little to work with and only aggravation, disappointment and lost time and money to look forward to.

Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, go to the search link and type in Joseph Marovitch.

Have a great week!

Next article: Purchasing for the purpose of Airbnb income!

Image:rawpixel.com from Pexels

Read also: Other articles by Joseph Marovitch